World Spotlight: Australia -- In the Land Down Under, the Bottled Water Industry is Over the Top
by Henry R. (Bob) Hidell, III
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Australia’s population of 19 million is concentrated along its coasts with little population in the central portion of the continent -- or the Great Australian Outback. Although parts of Australia have a climate and regional geography that experience high rainfall resulting in a plentiful supply of fresh water, there are many regions of the continent with extremely limited supplies of fresh water.

In addition, parts of south and western Australia experience very dry conditions and the soils are highly saline and very acidic, leading to extremely mineralized aquifers in those areas. In many of these more arid or contaminated aquifer regions, mining companies have set up towns for miners and administration services. Here, bottled water is becoming the lifeblood of these towns.

Driving the need The bottled water industry has become more important over the past decade as Australians became aware of the benefits of bottled water, particularly in light of various problems associated with municipal sources. While natural water supplies have experienced water quality issues from time to time as a result of the hydrogeological environment, Sydney has experienced several Cryptosporidium outbreaks in the last several years. These outbreaks increased consumer awareness of bottled water in a market where, prior to such public water quality issues, Australians had largely assumed that their natural public water supplies were safe. In fact, historically the Australian consumer believed that bottled water was a luxury for those who just wanted to be “different.” This view of bottled water has changed, especially during the last decade. More and more Australians have turned to bottled water for taste and quality reasons.

According to Neverfail Spring Water Company, the number one five-gallon bottler in Australia, there are approximately 150,000 water coolers in the Australian market today. Neverfail and Palm Springs Water Company account for almost 85 percent of the Australian cooler market. The estimated annual total water volumes sold in the home and office delivery business is 117 million liters (30.9 million gallons). Basically, both 19-liter and 15-liter polycarbonate bottles are provided for the home and office markets. Australia, like much of the U.S. market, is turning to the smaller bottles for ease of handling.

Coming in all sizes The Australian bottled water industry has also seen a significant sales increase of the small package, convenience size PET plastic bottle retail product. These packages range between 0.5-milliliter and 2-liter sizes. The 10-liter size is gaining in popularity and often referred to as a “cask.” It’s manufactured from high-density polyethylene (HDPE) plastic. It’s typically stored in a home refrigerator as a chilled water product. The retail market of the PET units -- excluding sales into the on-trade such as restaurants, hotels and pubs -- accounts for an estimated 75 million liters (19.8 million gallons), according to Steve Keim, president of the Australian Bottled Water Institute. Keim suggests that the on-trade volume is about another 50 million liters (13.2 million gallons). This brings the total Australian bottled water industry to 242 million liters (63.9 million gallons) -- about 13 liters (or 3.43 gallons) per capita.

In the PET market, the major players are Coca Cola’s Mt. Franklin brand, with sales of about AU$15 million, Evian with AU$2.3 million, Peats Ridge with AU$1.5 million, Frantelle with about AU$2.0 million, and Schweppes at about AU$1.5 million. In the 10-liter retail market, the leader is Peats Ridge with sales of about AU$3.0 million followed by Pueau and Frantelle with sales of AU$2.0 million each. Keep in mind that US$1 = AU$1.89 in early September.

Conclusion It’s anticipated that growth for 2001 in the Australian market will be somewhat lower than the 10-15 percent experienced for the last four years. Growth of around 8 percent is more likely to be seen. It’s possible that the lower growth rate could continue into the first two quarters of next year due to a slowing Asian and global economy, which could eventually impact Australia. For the long term, there’s no reason to believe that the industry cannot continue to average 10-15 percent annual growth over the next several decades. The components that generally drive bottled water markets are strongly present in the Australian market -- loss of confidence in the municipal supplies, a search for better-tasting water, and a general increase in the health awareness of consumers.

About the author Henry R. Hidell, III, president of Hidell-Eyster International, is an internationally recognized expert in bottled water and beverages. He’s on the board of directors of the International Bottled Water Association and serves as U.S. Administrator of the Association Internationale de la Distribution, Bruxelles. He holds a bachelor’s degree in geology from West Chester University and a master’s degree in land use planning and economic development from Southern Illinois University. Hidell can be reached at (781) 749-8040, (781) 749-2304 (fax) or email: hidell@hidelleyster.com

Australia at a Glance

Location: Oceania—continent between the Indian Ocean and the South Pacific Ocean

Area: 7,686,850 square kilometers (slightly smaller than the United States)

Coastline: 25,760 kilometers

Climate: generally arid to semiarid; temperate in south and east; tropical in north